Why GM’s “pay gap” for its first female CEO isn’t what it seems

No executive drew more of a crowd during the press days of the Detroit auto show last month than Mary Barra, General Motors' new chief executive and the first woman to head a global automaker. While she's shied away from making much news in her first days, the details of her salary released days ago suggested GM had chiseled her out of the same paycheck it gave former chairman and chief executive Dan Akerson, despite Barra having more than three decades of experience at the company. It's the kind of story that can make one enraged — and that, upon close inspection, doesn't hold true.

At first blush, the numbers look like the worst kind of chauvinism. Akerson was paid $9 million in salary, bonuses and stock for 2013; Barra's pay package that GM announced last month totals just $4.4 million, with $1.6 million in base salary and $2.8 million in short-term incentives. That's not only less than half of Akerson's pay while he was CEO, it's less than the $4.6 million contract GM gave him on his way out the door to serve as a consultant.

Those totals set off outrage from opposing corners about how Barra's pay exemplifies the statistic that women earn 77 cents for every dollar men earn while doing the same work, and that the first female CEO of a major automaker shouldn't suffer such an injustice.

But that's not the whole story.

The hitch in these criticisms derives from GM not fully releasing Barra's total compensation, including what's often the largest source for CEOs known as long-term incentives — likely stock grants, options or both. GM won't make that figure known until later this year, when it asks shareholders in June to vote on bonuses for all top executives; until then, it's impossible to compare Barra's rewards as CEO to Akerson's. In addition, Barra made $4.7 million in her role overseeing GM's global vehicle engineering; rarely does a corporation promote a top executive to CEO and then ask them to take less money for more responsibility.

To make things even less clear, Barra inherited a smaller job than the one Akerson had. Upon his departure, GM not only split the role of chairman and CEO but resurrected the title of president, one step below CEO, overseeing foreign operations. In essence, GM now has four people — Barra, chairman Tim Solso, president Dan Amman and ex-CEO Akerson — doing the tasks that Akerson handled on his own.

If those new numbers arrive and Barra still lags behind Akerson's final $9 million tally, then protests of inequality would be well-placed. But all indications suggest GM intends to raise the pay of Barra and its top executives now that it's no longer limited by the U.S. Treasury Department caps set as part of its bailout. In 2012, when Akerson earned $11 million, the company complained in federal filings that his compensation was "below the 10th percentile for executives in comparable positions" due to the caps. (It also complained the limits made it hard to recruit new top execs; the government overseers forced Akerson's pay down to $9 million for 2013.) And it's true that over in Dearborn, Ford CEO Alan Mullaly made $21 million in 2012, which was a pay cut for him from previous years; Ford hasn't revealed yet what Mulally and other top execs made in 2013.

But compared to foreign automakers, the pay picture at GM seems more generous. Akerson's 2013 pay was roughly in line with what Nissan-Renault chairman and CEO Carlos Ghosn earned. Both made far more than the $1.8 million salary and bonus for Toyota CEO Akio Toyoda, who now oversees the largest automaker in the world.

Meanwhile, GM's roughly 48,000 U.S. assembly workers will likely enjoy another year of record bonuses after averaging $6,750 in profit-sharing in 2013; the final tally will arrive with GM's earnings report on Thursday. But that's about it for their increased compensation, because the UAW agreed not to strike GM or Chrysler until 2015 as part of the bailouts. Barra, Akerson and the other top GM executives will be well rewarded for the company's resurgence; if those newer GM employees earning $17 an hour want a permanent raise from the now highly profitable automaker, they'll just have to wait two more years — men and women alike.


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